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Tuesday, December 27, 2011

Corn Ethanol Tax Subsidy Expires

Wow! Something good happened in D.C.! The December 24, 2011 Detroit Newsreports that Congress failed to renew the 30 year long tax subsidy for corn ethanol:

Washington —The United States has ended a 30-year tax subsidy for corn-based ethanol that cost taxpayers $6 billion annually, and ended a tariff on imported Brazilian ethanol.

Congress adjourned for the year on Friday, failing to extend the tax break that's drawn a wide variety of critics on Capitol Hill, including Sens. Tom Coburn, R-Okla., and Dianne Feinstein, D-Calif. Critics also have included environmentalists, frozen food producers, ranchers and others.

The policies have helped shift millions of tons of corn from feedlots, dinner tables and other products into gas tanks.

Environmental group Friends of the Earth praised the move.

Whatever the original merit of the argument for this subsidy (and I regard production subsidies as, at best, a bad idea, when they are not a corrupt idea), it was becoming increasingly apparent that this was not a good idea. There are places in the world where ethanol produced from crops makes sense, such as Brazil, because sugar cane is a very efficient converter of sunlight into glucose. It might even make sense for sugar cane grown in the U.S. There is at least one company working on sugar cane ethanol production in Hawaii--a place far from petroleum. But for corn? No.

1 comment:

I for one hope this means the price of Doritos will come back down. They've shrunk the bags all the way down to 11.5 oz, and the price up to $2.50- or more at Wal-Mart. When it used to be a 13 oz bag often on sale for less than $2. (And ages ago it was a full pound). I had to stop buying them because it felt like such a rip-off.